General Business Information for Ecological Farming and Forestry

Accountancy
While there are no standard accountancy costs, we can look at what others with similar businesses are spending. As accountancy fees vary within the UK, it’s also worth getting quotes from local accountants for preparing your annual accounts, and if relevant to your business, payroll services. Our survey of 10 farm and forestry businesses found that sole traders are spending £65-£75 pa to have an accountant prepare a balance sheet and profit and loss account. Some sole traders choose to prepare their own accounts. Larger amounts are spent on annual accounts by farm and forestry businesses with a requirement to report to Companies House, grant funders, and/or the FCA. Our research found that these organisations spend c. £600 - £700 pa. VAT registered businesses were also spending c. £750 pa. Registered charities are spending considerably more per year when required to have an independent examination of their annual accounts. Table 1 details the results of our research.

If you’re registered with Companies House or the FCA, don’t forget to also budget in their annual fees:

FCA: fca.org.uk/firms/calculate-your-annual-fee/fee-calculator

Companies House:

gov.uk/running-a-limited-company/company-annual-return

Card Payment Services
The LWA’s publication Direct Sales and Short Supply Chains details the cost of card readers such as SumUp and fees for payment service providers such as Stripe:

https://sumup.co.uk/

You can also obtain quotes for card payment services for your business over the phone by contacting an independent payment advisor, such as Accept Cards and Annectouk.

Existing farm and forestry businesses surveyed aren’t separately accounting for card fees so we can’t provide an indication of actual annual spending on card fees by the farms and woodlands we surveyed. However, typically card readers charge 1.75% per transaction, transactions on the internet cost 2%, and direct debit transactions are charged at 1%.

Certification and Assurance Schemes
Certification and assurance scheme fees are easy to find as the likes of the Soil Association and Red Tractor have fixed fees which can be found searching their websites. The government produces lists of certifying bodies and assurance schemes.

Organic certifiers

gov.uk/government/publications/organic-certification-list-of-uk-approved-organic-control-bodies/approved-uk-organic-control-bodies

Farm assurance schemes

gov.uk/guidance/kitemarks-in-farmed-meat-and-produce

Woodland assurance schemes

daera-ni.gov.uk/articles/forest-certification, biomass-suppliers-list.service.gov.uk, fsc.org, woodsure.co.uk pefc.org/for-business/forest-owners

There are however some schemes omitted from the government’s websites, including: Pasture for Life, pastureforlife.org/certification; and Grown in Britain growninbritain.org.

Cost of Borrowing
The interest we can expect to pay on any loans we need for our businesses changes with the economy. A cautious rate to use in your business plan in 2021 would be 6%, but it’s possible to find cheaper loans. The LWA’s Guide to Fundraising includes links to lenders with a particular focus on farm and forestry and/or community businesses and these include those providing loans at 0%.

The interest rate of a loan is one of two important considerations, the other being the terms of repaying the loan. Use your cash-flow forecast to work out the amount you could afford to repay every month. This can then be used to work out how long you need the loan for (loan term). See Fundraising for more details.

Farmers Markets and online sales platforms
A stall rental for the day is typically around £25, but ranges from £10 to £75. There is no one definitive list of farmers’ markets in the UK but you can find your local farmers’ or producer markets by searching the internet. The Farm Retail Association is a good place to start but there are many others. Each market will have a contact who’ll be able to provide you with their stall rental pricing. Online sales and management platforms such as food hubs through the Open Food Network, Ooooby, BigBarn, Boxmaster, and others all have transaction and sometimes set up fees. You can find these on their various websites.

Grants and Income
The LWA has produced a separate Guide to Fundraising which looks at grants, public, charitable and corporate.

It is important to acknowledge that many landworkers have low incomes, even when they are selling direct to their customers. Most of society externalises costs (eg the environmental costs of farming) but fairness and equity are key principles of agro-ecological farming and that includes a fair reward for work.

There is some excellent work being done in The Netherlands on fair reward for farmers which is introduced in a short film here. The webinar here provides more detail and if you read Dutch you can order the book about this work via https://www.eerlijkloon.eu/ An English translation is being worked on ( 2022). It shows that a open conversation between members and customers and producers is necessary and can lead to fairer rewards for farmers and growers.

Insurance
Our research of 10 farm and forestry businesses showed that there is a wide range in costs for insurance. The smallest costs were associated with those only needing public and product liability insurance at around £300 pa, with prices doubling to around £600 pa for those also needing insurance for staff and/or volunteers. Those businesses with regular open days, school visits, machinery, tenants, corporate days and more have higher insurance costs. See Table 2 for the breakdown.

Machinery Repair
The Farm Management Handbook produced by Scottish Agricultural College is free to download and contains a table of estimated annual cost of spares and repairs as a percentage of purchase price (page 369):

fas.scot/downloads/farm-management-handbook-2019-20/.

Marketing
Your business plan will need some combination of market research, meaning some evidence that you have collected to show that the customers you need are available, and a marketing plan with a budget for the work of reaching that customer base. It may well be feasible to do your initial marketing campaign as your market research to support your application for finance. For example, if you need market research to show that you can get 100 initial or additional customers for your business, the easiest way to do this may be to gather the contact details of 100+ people that say they want to be your customers. This way, your market research work can also function as a preliminary marketing campaign.

Be aware that if you collect contact details or any other personal information for business purposes, data protection laws are likely to apply. This means that you have a legal obligation to inform people how their data is going to be used, and to secure that information, including having passwords on any mobile devices that have access to your company email account, and the like. Budgets for marketing can include website development and maintenance, social media, leafleting, posters, events, and the administrative work of customer communications. Our research of 10 farm and forestry businesses found large differences in marketing activities, with some doing almost all of their marketing themselves, with little cost (£100 pa or less), and others allowing a large budget to reach a wide community of volunteers, and customers for their education and corporate services as well as their produce. The website Start-Ups provides an overview of prices associated with developing and maintaining a website:

startups.co.uk/websites/creating/how-much-does-a-website-cost.

Membership Fees
Membership fees for farm and forestry organisations including the LWA, NFU and the OGA and are upwards of £25 pa, depending on the type of membership. Each organisation clearly lays out their fees on their websites. Subscription services, such as to publications, can also be accounted for here and these figures can also be found on the publishers’ websites. Packaging

Our Direct Sales and Short Supply Chains page details the cost of packaging and provides supplier lists.

Vehicle Expenses
Vehicle expenses are highly variable, depending on the size of the business and the type of sales model that’s used. A CSA which has one distribution point where members collect their produce has very different vehicle expenses than a business with daily deliveries to restaurants. If you have a vehicle, a starting point to budget for vehicle expenses will of course be your annual insurance premium, road tax and if applicable, an MOT. After that, it’s recommended that you estimate your annual mileage, and budget for at least £0.35 per mile.